Exclusive: Pampers Cruisers tweaked again after 2010 overhaul

By Jessica Wohl

CHICAGO (Reuters) - Procter & Gamble is changing how it makes its Pampers Cruisers and removing the words "Dry Max" from the package, a year after a highly-touted diaper revamp led to consumer complaints of blistered baby bottoms.

Pampers, P&G's largest brand, typically updates its diapers annually. This year's refreshed product, which is supposed to feel softer and more absorbent, is likely to garner more attention than usual after the backlash Pampers faced in 2010.

Procter & Gamble Co <PG.N> is making the tweaks after hearing from several parents. Thousands complained to U.S. and Canadian safety commissions. Some even sued the company.

Pampers is the best-selling diaper brand in the world, with several varieties. Pampers Cruisers is a premium-priced version for larger infants and toddlers. Pampers will start selling the updated Cruisers, with a white inside liner and new Sesame Street pictures, in August.

"It's always a good time to make our products better," Bryan McCleary, director of external relations for baby care at P&G, told Reuters. "We're especially excited because we're giving people what they want -- new features consumers have asked for."

Pampers Swaddlers diapers for smaller babies are not changing, but both Swaddlers and Cruisers packages are set to lose the words "Dry Max" that highlighted the thinner, more absorbent material to which Pampers moved last year.

Cruisers will now tout "three-way fit," echoing a technology the company promoted back in 2007.

Last spring, P&G heavily promoted Pampers Swaddlers and Cruisers with Dry Max. Chief Executive Bob McDonald even called them the brand's "biggest breakthrough" in 25 years.

The latest changes come at a crucial time as premium-priced diapers have lost customers and both Pampers and its main rival, Huggies, are getting ready to raise list prices.

Pampers and Huggies, made by Kimberly-Clark Corp <KMB.N>, are banking on attracting parents willing to shell out extra money for diapers that they say are more comfortable and absorbent than other diapers. Retailers, meanwhile, like to promote new types of diapers in order to drive sales -- not only of diapers, but of other items for babies.

The task has become tougher as parents look to save money in the face of rising food and gasoline costs, and as a slower U.S. birthrate puts pressure on the diaper category.

Wall Street has taken notice that P&G's diaper business has been losing share, even after the company lowered some Pampers prices and promoted its less-expensive Luvs brand to keep parents from turning to rivals.

"What you're seeing, I think, Procter struggling with, is still a little bit of that hangover from the Dry Max controversy," said Sanford Bernstein analyst Ali Dibadj.

For graphics on U.S. and world diaper sales, click here: http://r.reuters.com/nyz39r


P&G was sued in May 2010 by parents who claimed Dry Max diapers caused severe rashes, oozing blisters and other skin problems. P&G has called those assertions "completely false" in the past and declined to comment on the pending litigation.

After months of investigations, the U.S. Consumer Product Safety Commission and Health Canada found no specific cause linking the diapers to rashes.

Pampers, with $10 billion in annual sales, is the world's best-selling diaper, while Huggies, which also makes the popular Pull-Ups training pants, is the best-selling brand in the United States, according to market research firm Euromonitor International.

Both brands saw their dominance tested last year, as Wal-Mart Stores Inc's <WMT.N> Parent's Choice brand, Costco Wholesale Corp's <COST.O> Kirkland Signature line and other chains' diapers gained traction.

Huggies hopes that fashion is enough to win over shoppers. It brought its Little Movers "jeans" diapers back to U.S. stores after parents with a little extra money to spend splurged on the denim look-alike diapers for their little ones during the spring and summer of 2010.

Kimberly-Clark estimated that it sold more than 2 million packs of the jeans diapers in North America last year. The blue diapers helped Huggies Little Movers volume rise 20 percent when they were sold, it said, citing Nielsen data.

There could be another Huggies on the way, but Kimberly-Clark declined to comment on a patent filing for Huggies Little Movers "Slip-On." It said diaper innovation that Chief Executive Officer Thomas Falk discussed on an April 25 conference call is still a few months away.

(Reporting by Jessica Wohl, editing by Gerald E. McCormick)